Anatomy Of An Effective Pricing Hurdle: Premium Ice Cream

Apr 12, 2017

 

A look at how aspects of a very effective pricing hurdle designed to sell premium ice cream can be used to sell more flowers in the retail flower business.

 

A pricing hurdle exists so that the vendor can offer discounts without cannibalizing full price/profit sales. The discount exists to increase sales by motivating only those people who would not buy at full price. Meanwhile the hurdle is there to discourage anyone that would pay full price from taking advantage of the discount. By jumping over the figurative hurdle the buyer has "earned" their discount.

This is a great one. On any 31st of the month you can save 31% on their ice cream. There are seven days each year where you can save a lot of money on ice cream.

 

example-of-an-effective-pricing-hurdle.png

 

To evaluate this you have to look at two things…

 

Does it Increase Sales, Specifically New Sales They Would Not Have Had Otherwise?

In my case, yes, absolutely. I’m not proud of this but I have it in my Daytimer… every 31st of the month I get a little “go buy ice cream” message. And if at all possible I do. I make a point to go and buy ice cream that I wouldn’t otherwise.

 

Does It Cannibalize Sales At Full Price?

Not really, and for a couple of reasons.

The first is that I have some small degree of pride, and I’m not going to buy thirty containers, I’m going to buy two or three. And even if I had no dignity whatsoever there just isn’t enough room in the freezer to stockpile a lot of it.

And… once it is in the freezer it’s not going to last. A week or two later it will be gone, and if I have an irresistible craving for Gold Medal Ribbon I’m not going to wait another six weeks, I’m going to go back and pay full price.

If anything what they are doing is stealing sales from their lower priced competition. Generally I’d buy ice cream from the supermarket, but if we know we have the good stuff in the house we won’t. It represents truly “extra” sales for Baskin and Robbins.

 

In The Flower Business

The part about not lasting (perishability) is very relevant to the flower business. Flowers, like ice cream, have a shelf life too. So if you have a special on the 31st of January I can’t load up on flowers and save them until Valentine's Day (although if I did you could certainly argue that I had earned a discount).

So some shops do different things on the 31st. It might be a special seasonal arrangement for $31. It might be 31% off anything in the store (you fill the store accordingly). It might be 31 stems of particular flower you can get a deal on.

But again we’re going to rely on…

• reaching out to people who have shown they are interested in deals
• seriously thrifty people who will remember to come by on the 31

The common goal is that we’re adding incidental sales to people that would not be paying full price.

 

creating-pricing-hurdle-for-flowers.png

 



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